2018 (8) TMI 757

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..... which necessary observations are made in para 4.3 itself. - no substantial question of law in this issue. Appeal admitted on the following ground: Whether the Appellate Tribunal has substantially erred in law in deleting the addition of 3,01,66,650/being Arms length price on corporate guarantee?
MR. M. R. SHAH AND MR. A.Y. KOGJE, JJ. For The Petitioner : Mr Manish Bhatt, SR. Advocate with Mrs Mauna M Bhatt (174) ORAL ORDER (PER : HONOURABLE MR.JUSTICE M.R. SHAH) [1.0] Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Income Tax Appellate Tribunal, Rajkot Bench, Rajkot (hereinafter referred to as "learned ITAT") in ITR No.301/RJT/2015 for AY 201011, the Revenue has preferred the present Ta .....

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..... in it was held that the, "Interest free loan is subject to arm's length test irrespective of commercial expediency". The Appellant Company has also contended that requisite approval of the Reserve Bank of India (RBI) was obtained and RBI while giving approval keeps in mind all the provisions of law further RBI has accepts the remittance as in the form of Quasi Capital Therefore no interest need to be computed for the purpose of the Income Tax Act, 1961 however same view is not acceptable because permission is given by the RBI is for totally different purpose. The RBI is only concerned with foreign exchange and they would look matter from different point of view. However, what is the Arms length price (ALP) of loan advanced to Associa .....

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..... 3 basis point of whole Europe to 163 basis point of France. Further, TPO has also added 100 basis point towards foreign exchange risk coverage. Foreign Exchange risk is normal in every business which carries out transactions with parties outside India. The currency may fluctuate both ways i.e. it may increase / decrease resulting in loss / gain to the Appellant Company. No party factors foreign exchange risk assumed by him all the time of entering into any International Transactions and no separate charges are recovered for the same. This is due to the fact that if the currency fluctuates and profit is earned by the Appellant Company, it would not, pass on the profit to other party. Hence, I direct the Assessing Officer to determine t .....

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